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GameStop: "We're Not Ashamed Of The Pre-Owned Business"

The pre-owned video game market has become controversial in a number of different ways. GameStop, a pioneer in the used game market, doesn't apologize for such a lucrative business.

In speaking to Gamasutra, GameStop president Paul Raines revealed that 70% of all income taken from the sale of used games is spent immediately on new titles. And they're also proud of how they've brought pre-owned software to the US High Street. Said Raines:

"We are not ashamed of the pre-owned business and in fact we believe that it's good for the industry. We're really not cannibalizing new game sales. That's a common misconception. The knowledge of how this model helps drive sales really resides at the publisher level.

A lot of our consumers tell us that the pre-owned business has allowed them to learn more about video gaming. There's a disconnect between a lot of the blogosphere and what consumers tell us."

That's not really surprising. And the majority of complaints still center around the fact that developers are struggling, due in part to one big problem: They see no money from the sale of pre-owned games. But Raines still believes in the used game market, and says game makers just don't understand how much it really helps.

We have not been successful in communicating to developers how this business really helps. So my answer to developers is that we are driving growth in a category that needs to grow.

We think there's a real lack of awareness as far as how it's good for the industry. The transparency you're seeing from us is because we want people to know about it, helping people understand what we're trying to do for the industry."

I'm the same, some people don't seem to understand that most people who buy a game used would never have bought the game new. The idea that all the money made from used games is money that devs have lost is false.

But the problem is that it might boost gaming industry a little bit but it is als killing developers profits. Due to use games people who would buy those games will buy the used ones instead of the new ones and all the profits go to Gamestop. If there werent used copies then many who do buy game will buy the new ones. Gamestop does not care for the outcome of the developers. They should do it like how movies are done now. Theres a waiting period before DVDs/Blu ray movies are allowed for rental. They should allow new games to be sold for a period time before retailers can put the used games on the rack for sale.

I agree beamboom. When I didn't have a job, I relied on trading in old games to get brand new ones. Dozens of games have been purchased this way, and I only buy used games if it is impossible to find new.

I have often argued that I don't think the used game industry is bad, and I still stand by it.

Just to clarify: Like Xenris say above I buy *new* games, but they are financed by trading in used games.

I buy them new cause there's hardly anything to earn from buying them used. But I would not have bought all those games if I could not at the same time trade in other games that I didn't want any more.

I would be much more careful with what games I purchased if they had no value after purchase.

gamestop is full of themselves. All it takes is a trip into their store just to see how they attack their customers with used game promo offer after used game promo offer. True, they want you to reserve new games. It's how they get the initial pool of copies out into the market. Then they reel those same guys back in with a trade-in promo and sell the semi-new game for $55 with a Rewards card perk of "try before you commit to own." A rental service of sorts. Which in turn negates new game sales in the first place.

I was going to pre-order DOA5 from them, but when I went into their store two associates were just hounding a couple about buying a warranty for a used PS2 and getting warranties on their used games, even though they're "garunteed to work." And these employees persisted even after the couple objected several times to the warranties.

It's also not hard to see just how much floor and shelf space is allotted and product placement is positioned to spotlight used game products before the new game sections for respective platforms.

But whatever, give it until the next-gen and Gamestop will have shrunk and closed many stores as the publishers will have taken back a percentage of the market through various DRM's and service contingencies.

At the end of the day I see the problem ultimately tied to an industry that built itself on a format of duplicateble code and where value is placed first in what is intellectual over physical at a mass market level.

lol, two words then. Point is, GameStop can BS all they like, publishers and developers see jack crap from used game sales and no amount of self serving BS from a company that depends on used game sales for it's primary source of revenue is going to change that, nor will it persuade publishers or developers to allow GS to keep taking their business via used sales.

I buy used on games im not sure about. Dark Souls was a game i bought used and am glad i did. I bought Skyrim new thinking im going to sink in 100 hours plus but ended up with 17 and felt like i did everything that i would have wanted to. So instead ive started using Redbox, rental for 24 hours is 2$ so games like ghost recon (future soldier) dont have to be bought used, because after 5-6 hours on any game you know if you like it or not. GS should at least offer 15% income from used games to the devs, its only fair right?

Obviously there are benefits to a used model. But do the benefits outweigh the pitfalls?

I'm not so sure.

Obviously, Gamestop is going to focus on only one side of the story. They say the evidence of the benefits show on the publisher side of things. But the rest of the industry disagrees. There's obviously 2 sides to this story.

I wonder how many people will read this one sided POV and say, "YEAH! And I always knew it!"

I still think the used market needs to stay for it's benefits, but it needs a bit of tweaking to maximize the benefit to the industry and be more fair to consumers. It's an unbalanced model that, in my opinion, rips off consumers and publisher/developers. it just seems beneficial because it's better than nothing at all. I think his point of view doesn't change that. He's definitely right. He just doesn't share the whole picture. I definitely don't get people being 100% ok with the model... especially when they should be getting more from it. (Not less. And not zero used market, either)Last edited by Underdog15 on 8/6/2012 8:04:04 PM

Read what I wrote. That doesn't change my POV even a little bit. I said the used market needs to stay but it needs to be reformed. I already know their POV. I even says they are right, but that they are only observing one side if the issue. I get your position as well, but trade in values at less than half of what gamestop will resell it for which is only $5 less than new isn't right either.

Neo, if there is no money selling these things, then perhaps they should find a way of adding value rather than shafting their customers along with game developers and publishers. To me, Gamestop appears to be a parasite on the game industry. They take from everyone, give to no one, and claim they are doing it for everyone else's benefit but theirs. I call BS on it.

I've said for years that the used game market is a necessity. The problem with Gamestop is that not only do the devs get nothing, but the customers get dragged over the coals at the same time. It would be nice if they would give some kind of kickbacks to the devs, but since it is a corporation in the sense of greed I don't see this happening. And they should also give back more in trade/cash to the customers but again they won't.

Other shops offer better trade-in value then them and sell their games for cheaper, unforunately these shops are far and few between.

The used game market has allowed for dozens/hundreds of IPs to become stable franchises and everyone knows this. Many people to this day will say things like "I don't know" or "it doesn't interest me" yet when they get it used for cheap some end up becoming fans of that game/franchise, and then end up buying something from that franchise new. So yes the used market is one of the reasons that gaming is where it is, but Gamestop better not try and take any of that credit either.

Gamestop is the definition of greed and they will try and stand up for their rights all the way to the end, I get this, but I don't condone it. Hopefully one day there will be enough small shops around so that people will actually have a real choice as I don't consider online shopping a choice for a lot of people.

Sorry, but the problem is that small shops die. Look at the home video market. First you had small video stores renting videos, then the larger chains came in, and they even started selling used tapes/DVDs at knock down prices. Ultimately the small local stores were extinguished by the chains. Then Netflix and other mail order/streaming/download services arrived, and not those chains are closing branches and going online themselves.

Let's not delude ourselves into thinking that somehow a network of local game stores is going to spring to life to challenge GameStop, Target, Walmart and Amazon. That cannot, and will not happen. What's more likely is that the game industry will go the same way that the video industry has. Gamestop needs to stop shafting customers and change their business model to survive.

All businesses have the potential to die even Gamestop. The 3 main shops I go to around here have more customers then the all of the local Gamestops. "The Record Exchange" has 4 shops in this area and has been in business for more than 30 years(hence the name, which many younger people don't get)), the crowds in these shops are huge and far larger than any Gamestop I have ever gone too. "It's About Games"(formerly "The Video Game Exchange") is another one and is the best shop in this area as the owner offers much better trade-in value, sells his games cheaper, and is also the shop that will import anything you want for either free or next to nothing, they have also been in business for over 20 years. We have several other shops that have been here and yes many have shutdown, but that doesn't mean they all will. In fact all of these major corps started as a small business at some point.

These types of shops may have been extinguished in your area but I guarantee that is not the case for all areas. Other then the online stores each of those you named started small and grew to what they are now, and sorry but that can happen again and in fact it will. Hopefully though they don't lose sight of what got them started like many large chains do.

Mind you I live in a major city which gives these shops a better chance, but even then I have watched dozens of them come and go in the blink of an eye. So I understand what you're saying but at the same time have shops around here that prove it wrong.

"GameStop pulls in $1 billion/year from the sale of pre-owned products. That's worth noting."It is worth noting so why not try this out..

Test the theory.

If all NEW games cost as much as Gamestop's USED games then consumers would be buying the new ones right?Then the developers would rightly get a piece from the ($1 billion/year in sales) slice, the publisher who complains alot also gets some of that 1 billion dollar pie and Gamestop gets none.

someones in denial........"The knowledge of how this model helps drive sales really resides at the publisher level."right, so the only ones that understand that used games are not hurting new sales are publishers?so then why is it publishers who are releasing online passes, preorder incentives, DLC exclusivity, ect, ect, ect, just so they could KILL used gaming?hmmmm?i mean come on dude if your going to make up a BS excuse at least make one that makes sense!

"GameStop president Paul Raines revealed that 70% of all income taken from the sale of used games is spent immediately on new titles."

Wait a minute, that doesn't work at all. Parse that out and look at what is really being said.

Are they saying that GameStop spends 70% of all net income gained through used game sales on new titles? Nope, they're not. They're saying that 70% of the money they pay to consumers for traded titles is eventually spent (according to GS) on new titles. The thing is that the statement is incredibly misleading since it implies that somehow 70% of the revenue from used games goes back to new games, and it doesn't, at all.

The income from use games for gamestop is 2-3 times the trade value paid to consumers. So for a game that GS resells for $55, they give the consumer about $20-$25 in trade value. If 70% of that trade value to consumers is then spent on new games that means that we're really only talking about $14-$15 per game. That doesn't finance the cost of a new game. Meanwhile GS is reaping a windfall of $30-$35 for that traded game. How much of *that* income get's spent on new games? 0%.

The truth of the matter is that the total income that GS sees on used games is in the billions of dollars a year, none of which goes to publishers. If those billions were not being spent on used games, they'd be spent on new ones, which would immediately give the game production business a boost. Oh, but it's deeper than that. What if GS gave consumers 66% on the dollar in trade value. So a game that they will turn around and sell for $55, would earn the customer trading it in $36.63 to spend on their next purchase. GS would still clear nearly $20 on the used game which as has been stated will be visually checked, put back in the case and shrink wrapped before sale.

If 70% of that $36.63 is then spent on new games, then perhaps you could make a case that used sales did not cannibalize new sales so much. The trouble is that consumers get 40% or less for their traded titles, and the resulting 70% spent on new titles is a much smaller amount. But then, if GS gave a more realistic trade value, their cash cow would only be a cash calf. Wouldn't that be a terrible shame?

But then, GS would prefer to mislead and lie, trying to appear like they are somehow beneficial to everyone instead of simply sucking cash out of the pockets of customers and game makers alike. Dishonesty appears to be the name of the game at GS.

So when games go all digital and developers still lose money who will be to blame then ? The problem is not Gamestop.... alone. The problem is the cost at which these developers make the games. You spend to much to make a crappy game and you will lose money.

All I know is that I will never buy or sell to or from a Gamestop. Ever. When I walk in, and see a brand-spanking-never-opened-hot-off-the -presses game for $59.99 and the exact same "Used" game next to it for $59.99. And I can look in their trade-in book and see that they will only give $15 cash or maybe $25 in store credit, I call bs. As some others have posted, I support the smaller mom-and-pop record and game stores, I get a much much better value for my trade-in, and I get used games, even the barely used but opened ones, at a significant discount over the "real" new one. The attitudes of the employees at Gamestop, with one exception, I've seen are consistently arrogant. Just my impressions over the years, Gamestop does care about anything else but the bottom dollar, and anything the president or owners say to the contrary is nothing more than bald-faced lies. Heh sorry for the late reply.

I am not against buying and selling of used games. Developers already got there cut for selling them. If people were not buying new games then where the hell do used games come from. Had to be new at some point and someone had to have purchased it new to begin with.